In a modus operandi reminiscent of the 2G spectrum scandal, a nexus of top politicians and bureaucrats assisted Sikkim CM Pawan Chamling to award arbitrarily the Rs 6,000-crore 1,200 MW Teesta Stage III hydroelectric project to a company with suspect credentials.
The players in the irregularity, involving Teesta Urja Ltd, include Union Power Minister Sushil K Shinde, Andhra MP Jagan Mohan Reddy, his father and former chief minister of Andhra Pradesh YSR Reddy and former power secretary RV Shashi.
An expose done by currentnews.in in its latest weekly issue says this scam has indicated similar irregularities in cases of other mini hydroelectric projects awarded to private parties. There were no competitive biddings and the Current News report pegs the losses at Rs 20,000 crore.
There are already reports that the CBI is investigating into Jagan’s 'benami' investment in consortium Teesta Urja Limited (TUL).
The scam, the Current News report says, originated in 2004, when Pawan Chamling came back to power and decided to keep the power portfolio with himself. He exhorted for a 'quick' policy paper to establish small hydropower projects above 25 MW of capacity. The policy was to open doors for private parties to construct hydropower projects on the basis of 'Build, Own, Operate, Transfer' (BOOT) system.
The IPP would arrange for the funds for the equity participation of the government. The Sikkim government would repay the partner the arranged funds from the revenue that would accrue from the free power to which it would be entitled. Royalty was set at 12 percent of net energy for the first 15 years and then 15 percent for the next 20 years.
Under the memorandum signed by the state government and Teesta Urja Ltd, Teesta had to allot equity to the former within six months of signing of the agreement. Six years have passed and the Teesta is yet to transfer equity to the state government, while both – the Union government and the state government – are "actively endorsing the efforts of Teesta to get clearances and money from the Union government"!
According to the Union government guidelines, a joint venture company in which the state government has less than 51 percent equity cannot be awarded a hydropower project above 100 MW by using the MoU route to bypass competitive bidding.
But Pawan Chamling did exactly the opposite of that – at least six times from 18 July 2005 to 1 March 2006. These "terms"—which even the Comptroller and Auditor General of Sikkim criticised as they "favored the independent power producers at the expense of the exchequer"—were to form the basis for the more than 25 power project deals that were signed in the next few years, says the currentnews.in report.
Even the awarding of the project on MoU basis is quite strange. The 1,200 mw power project was awarded to a nondescript company called Athena Projects Private Limited (APPL). The same company was rejected on earlier occasions for the same project.
Just like 2G spectrum scam, once the APPL got the licence to build the 1,200 MW hydropower dam, the company’s transition was set in order and APPL became inconsequential in the new power equations.
"In their first letters to the Sikkim government they are Athena Advisors Pvt. Ltd., then in a 14 September presentation they transform into a joint venture with Andhra Pradesh Genco, a State PSU, and a consortium of companies led by APPL called Athena Consortium. AP Genco is given prominence, Athena Consortium takes the second place and in the 21 February 2005 cabinet note they are called APGENCO-Athena Consortium," the report says.
"APPL had been formed only in August 2004 and until then in its short but exciting life it had not executed a single infrastructure project of any kind, shape or size. APPL did not have any experience let alone expertise in hydropower or power generation of any kind. The only electricity APPL would have generated would have been from the genset at its Jorbagh office during one of New Delhi’s frequent power cuts," the report says.
APPL then formed Testa Urja Limited (TUL), a ‘Special Purpose Vehicle’, specifically to enter into a joint venture with the Sikkim government and qualify to be allotted the Teesta Stage III project through the non-competitive bidding MoU route.
Not only this, several public sector nationalised banks, including Banak of Baroda and Punjab National Bank have invested in TUL’s project.
With a PIL filed in this case, the investigations are on to find actual owners—politicians or the businessmen—of the Teesta Stage III hydroelectric project.